Citi executes floating rate issuance for receivables

Citigroup has executed India's first floating rate issuance for receivables of Rs 252 crore using the five-year government security as the benchmark.

About 77 per cent of the pool was from the Citicorp Finance (India) Ltd stable and the balance from Citibank NA.

Citigroup, in the form of an undertaking, has provided credit enhancement of around 4.45 per cent to the investor payouts.

Over the last three months , Citigroup has mopped up approximately Rs 570 crore through these instruments.

In the earlier two deals for Rs 259 crore in November 2003 and Rs 50 crore in December 2003, the Mumbai interbank offer rate was taken as the benchmark.

The present structure has an embedded derivative (interest rate swap) for hedging the interest rate on the instrument.

Citigroup India, head, structured finance and syndication, Varun Batra said that with the expectation of the domestic interest rates bottoming out, the demand for floating coupon on securitised debt has increased.

Structures that incorporate an embedded derivative enable investors to access the benefit of highly rated securitised debt along with floating interest rate, he added.